The Institutional Risk Analyst

What it says to me is every institutional portfolio has to think about holding some gold, if they want to protect themselves against extremes of default risk, some allocation permanently to gold. Now, should it be 3% or 4% or 5%? I don’t know. We can do what the europeans are doing and go 50% into non-dollar assets. In other words, we are in dollars. So, the only way to address US default risk is for us to own gold or something else. Because for us to own the CDS in dollars

The key point to make about gold and backwardation isn't a gold price correlation to interest rates, but a gold basis correlation to interest rates. The basis spread is far more important than the price level when we talk about gold. I argue that we'll get to a point where essentially gold withdraws its bid on the dollar entirely. And gold goes into permanent backwardation more than a devaluation of money the backwardation of gold really represents a collapse in trust in the